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Home >> Lending >> Home Mortgage
Reason for Failing to Endorse Loan
I purchased my home in 1997 with a loan from my bank through the FHA. I recently found out that my bank failed to endorse my loan and my home loan was uninsured as a result. I have documentation from HUD that says that my loan could have been endorsed, and it was just that my bank failed to do so.
The FHA refunded my upfront premiums and subsequent mortgage premiums to my bank on my behalf, but my bank never informed me of the refund and never applied it to my loan. My bank then converted my loan from FHA to conventional without notifying me. I attempted to get FHA assistance when I encountered some financial hardship, but was turned down because my home loan was not insured. I then contacted the conventional loan people, but was turned down because I had an FHA loan.
I went through loss mitigation without any luck and then acquired $16,000 in legal fees before finally filing bankruptcy. Do I have any legal recourse against my bank? Do their actions void the loan?
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 We don't believe your loan should be voided. You borrowed and were made whole when the FHA fees were refunded to you. You should be able to have something from your lender stating why this happened and that you never had an FHA secured loan. That may allow you get counseling, but it sounds like this is too little, too late.
We aren't in a position to decide the merits of your case. You are asking for legal advice, which we cannot provide in any event. If you believe you were harmed, legal action may be your only route to follow. Having already had $16,000 in legal expenses plus the filing of bankruptcy, you need to consult with an attorney of your choice who might offer the initial consultation free. That way, at no cost, you can determine if you have a good cause for action. Other than that, it is time to move on and rebuild your credit.
Published on BankingQuestions.com 5/06/08
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